How to Reinvent the G.O.P.

Published: August 29, 2004

(Page 6 of 8)

The War on Islamic extremism. The first great agenda item has been thrust upon us. This has been miscast as a war on terror, but terror is just the means our enemies use. In reality, we're fighting a war against a specific brand of Islamic extremism, a loose federation of ideologues who seek to dominate the Middle East and return it to the days of the caliphate.

We are in the beginning of this war, where we were against Bolshevism around 1905 or Fascism in the early 1930's, with enemies that will continue to gain strength, thanks to the demographic bulge in the Middle East producing tens of millions of young men, politically and economically stagnant societies ensuring these young men have nothing positive to do and an indoctrination system designed to turn them into soldiers for the cause. This fight will organize our politics for a generation, as the Cold War did.

The first task is to build a new set of strong federal and multinational institutions to defeat this foe. Obviously the intelligence community needs to be reorganized. The military needs to be bulked up, and public diplomacy needs to be rethought. Somebody has to develop a counterideological message that is more than just: ''We're Americans. We're really decent people. We're nice to Muslims.''

We need to strengthen nation-states. The great menace of the 20th century was overbearing and tyrannical governments. The great menace of the 21st century will be failed governments, because those are the places where our enemies will be able to harbor and thrive, where violence can nurture and grow, where life is nasty, brutish and short.

We are going to have to construct a multilateral nation-building apparatus so that each time a nation-building moment comes along, we don't have to patch one together ad hoc. In the 1990's we thought free markets were the first things new nations needed to thrive and grow. Now we know that law and order is the first thing they need. We are going to have to construct new institutions to help nations develop rule of law within their boundaries, for if that is not accomplished, all the economic development in the world will not help.

Entitlement reform. At home, the most obvious and daunting problem is runaway entitlement spending. Right now, Medicare, Medicaid and Social Security consume 8 percent of U.S. G.D.P. By 2040 these programs will consume 17 percent. In other words, these programs will swallow a sixth of the national wealth, requiring massive tax hikes to support them. That's simply unsupportable if we are to maintain a vibrant, growing economy.

Just as bad, entitlements will devour the federal budget. It will become impossible to create new programs to deal with new problems. The government will become a giant, immobile entitlement machine. The U.S. will follow Europe down the route of welfare-state stagnation, with growing burdens, aging populations, limited growth and horrendous choices.

The solution is clear: push back the retirement age, reduce benefits for upper-income people, redesign the welfare state so that individuals have control over their own benefits packages. That means designing programs that allow people to have their own health insurance, which they can carry from job to job; to control their own unemployment insurance and tailor their retraining efforts to suit their own talents; to invest part of their own pension money and benefit from higher returns, so they have greater incentives to save on their own. It means reforming the health care system so competition works as it does in every other sphere -- to improve value, spur innovation and reduce costs. Our current welfare state produces either no competition or warped and ineffective competition.

Social mobility. America remains a remarkably mobile society, but at the bottom ends of the education and income scales, we're seeing an ever-larger group of people unable to rise and succeed. Over the past two decades there has been a sharp rise in the number of people who define themselves to pollsters as ''have-nots.'' Though poverty has declined since 1988, the number of blacks who call themselves ''have-nots'' has risen to 48 percent from 24 percent. The number of whites who use that phrase to describe themselves has risen to 28 percent from 17 percent. These perceptions have been rising steadily over the Bush, Clinton and Bush presidencies.

When people call themselves ''have-nots,'' they are not only commenting on their current economic status. They are also commenting on their prospects. They are saying that they do not see any plausible way they are going to make it and thrive in this society. This is poisonous. It is doubly poisonous because African-Americans feel this way in such high numbers. In other words, not only is there a perceived lack of opportunity, but this perception also rubs raw at the central wound that runs through our entire history: racial inequality.

Worst of all, this is not just perception. People without skills really do have limited prospects in the world. There really is a huge achievement gap. By high-school graduation, the average Hispanic or African-American student is roughly four years behind the typical white or Asian student, and this gap has been getting worse over the past 15 years, despite $100 billion in Title I money spent to reduce it. The results are obvious and horrific. According to one study, 44 percent of urban African-American men without a high-school degree are idle all year round. Lacking jobs, they lack prospects. This is an affront to our identity as the land of opportunity, a menace to the Lincolnian vision of a hypermobile society and ruinous to our social fabric.